Cell-cell communication is a fundamental mechanism by which cell growth and differentiation are precisely controlled. Defects in these processes cause human cancer and birth defects. The Hedgehog (Hh) family of secreted signaling proteins controls cell growth and differentiation. Loss of or decrease in the Hh signaling pathway activity results in severe developmental birth defects. In addition to developmental abnormalities, inappropriate activation of the Hh signaling pathway is also associated with human cancers including basal cell carcinoma and medulloblastoma. Our long-term goal is to understand the molecular mechanisms by which Hh signal is transduced and to determine the role of Hh signaling in pattern specification and tumor formation. In Drosophila, Hh signal is mediated by Cubitus Interruptus (Ci), a zinc finger containing transcription factor. In the absence of Hh signal, a significant fraction of Ci protein is proteolytically processed to generate a transcription repressor. Hh signal stimulation blocks the Ci processing and activates the pathway. Ci processing requires its phosphorylation by PKA, CKI, and GSK3 and the activity of Slimb, a component of the novel class of ubiquitin ligase called SCF complex. Vertebrate homologs of Ci are Glil, Gli2, and Gli3. Many studies suggest that Gill and Gli2 act positively, whereas Gli3 plays a negative role in the pathway. Consistent with a negative role of Gli3 in the pathway, the majority of Gli3 protein is processed in the absence of Hh signaling. Hh signaling inhibits Gli3 processing and reduces its RNA levels, thus regulating the net output of Gli transcriptional activities. Molecular mechanisms of Gli3/Ci processing and its regulation by Hh signaling are largely unknown. Using a broadly-based approach that incorporates biochemical, cell biological, genetic, and pharmacological methods, the objectives of the proposed study are to 1) Elucidate the role of CKI and GSK3, and _TrCP, the vertebrate homolog of Slimb, in Gli3 processin.q; 2) Understand the role of the proteasome in Gli3 processin,q; 3) Determine the role of unprocessed and processed forms of Gli3 protein in vivo. The completion of the proposed study will significantly advance our understanding of the molecular mechanisms of the Hh signaling pathway. It may also shed light on the molecular mechanisms of human congenital syndromes caused by Gli3 mutations. In addition, this research may give us insights into the design of therapeutic agents that modulate Gli3 processin 9 to intervene or remedy cancer related to misregulation of the Hh signaling pathway. [unreadable] [unreadable] [unreadable]